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Chaos seen over ninety-nine year leases
Zhean Gwaze, The Financial Gazette (Zimbabwe)
November 09, 2006

http://www.fingaz.co.zw/story.aspx?stid=1899

GOVERNMENT will today issue the first batch of 99-year leases for resettled A2 model farmers but critics have warned that the move could fall short of providing lasting solutions to financing the troubled sector, amid fears of a fresh round of disputed claims to land holdings.

The leases will be issued to 100 farmers who have been on their plots for at least three years, and have been vetted by the National Land Board for competence and commitment to farming, at a ceremony to be attended by President Robert Mugabe.

Government, which has had to extensively subsidise agriculture since the land redistribution exercise started in 2000, hopes the leases will give resettled commercial farmers security of tenure, which could serve as collateral for loans from financial institutions.

The farmers have in the past cited their inability to raise money and uncertainty about their future as reasons for the drop in food production levels.

Since the land would remain state property, industry experts said there was need for the government to explain whether farmers could use their farms as collateral as the leases only offered security to increase production levels.

The A2 farmers have been faced with shortages of inputs such as fertilisers and seed as they have depended on government handouts, which has also not been able to meet demand due to the shortage of funds.

Financial players have been apprehensive about funding the sector since the land reform exercise began in 2000 as a risk assessment survey by banks had revealed that it was risky to fund new farmers who did not have title deeds to the pieces of land they held.

According to a report from a local bank, the financial sector would like the Government to make the 99-year leases transferable in order to serve as title deeds that can be used as security when borrowing.

The report notes that although the Minister of State For National Security, Lands, Land Reform and Resettlement Didymus Mutasa said his Ministry was now giving 99-leases to Model A2 farmers "in order to give security of tenure and confidence to the new farmers for them to invest more in their farms…", he clearly states that the leases cannot be used as collateral.

In response to a question in Parliament last month, Mutasa said: "You cannot borrow money through the lease that you have not put onto the farm. If you build a house on the farm and you want to use the house to borrow the money, that is permissible but you may not use the land as collateral. The land does not belong to you but to the lessor, that is the Government…"

"Against this background, it is the banks’ fervent belief that the Government will soon resolve this important issue of collateral that is at the core of lending by financial institutions,"

"However, banks are also empathetic about the Government’s fears in making the leases transferable — another redistribution of land may take place, which may require another intervention. In this regard, the Government should come up with a replacement to land as security, may be some kind of irrevocable guarantees," the report said.

There are fears that the issuance of the leases, coupled with the promulgation of the Gazetted Land law, which will see farmers remaining on gazetted land facing criminal charges and custodial sentences of up to two years, could be the decisive stage in the total expropriation of the few remaining farms occupied by white farmers.

The Commercial Farmers Union, which largely represents the interests of white farmers, and has reported an upsurge in evictions of its members in recent months, has expressed doubt over the efficacy of the new policy.

"Will 99-year leases in fact really address the issue of security of tenure when it has been proven around the world that there is a direct link between development and property rights?" the Commercial Farmers Union queried when approached to comment on the issuance of the leases.

Only about 600 out of an estimated 4 000 large-scale producing white commercial farmers remain in Zimbabwe after the government’s land reform programme which saw the landless blacks acquiring large tracts of land in a bid to correct racial imbalances in land ownership.

The CFU also noted that a few actual transactions of compensation by government have been concluded with some of the former white commercial farmers hence it was questionable how the leases would come into effect.

The leases needed to be supported by surveys and correct demarcation of land and the government has indicated it lacked capacity.

Permanent Secretary for Agriculture Ngoni Masoka recently told Parliament that the ministry of lands was experiencing an acute shortage of surveyors because the law only permitted them to recruit from the University of Zimbabwe.

"It has taken long to [try to] amend such restrictive legislation ... [because] it poses serious problems for the capacity of the Surveyor General to survey land in Zimbabwe," Masoka said, estimating that only 1,500 A2 plots would be surveyed this year — around 15,000 A2 plots needed to be surveyed, and the process could take three years to complete.

There are also concerns that influential people could take advantage of their positions to get the leases ahead of the intended beneficiaries as happened with the land reform programme.

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